Exhibit 10
Loan and Security Agreement
This Loan and Security Agreement (as it may be amended, this
"Agreement") is entered into on November 21, 1997 between
NATIONSCREDIT COMMERCIAL CORPORATION, THROUGH ITS NATIONSCREDIT
COMMERCIAL FUNDING DIVISION ("Lender"), having an address at 1177
Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and
RAYBESTOS PRODUCTS COMPANY ("Borrower"), whose chief executive
office is located at Xxx Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx
00000 ("Borrower's Address"). The Schedules to this Agreement
are an integral part of this Agreement and are incorporated
herein by reference. Terms used, but not defined elsewhere, in
this Agreement are defined in Schedule B.
LOANS AND CREDIT ACCOMMODATIONS.
Amount. Subject to the terms and conditions contained in this
Agreement, Lender will:
Revolving Loans and Credit Accommodations. From time to time
during the Term at Borrower's request, make revolving loans to
Borrower ("Revolving Loans"), and make letters of credit, bankers
acceptances and other credit accommodations ("Credit
Accommodations") available to Borrower, in each case to the
extent that there is sufficient Availability at the time of such
request to cover, dollar for dollar, the requested Revolving Loan
or Credit Accommodation; provided, that after giving effect to
such Revolving Loan or Credit Accommodation, (x) the outstanding
balance of all monetary Obligations (including the principal
balance of any Term Loan and, solely for the purpose of
determining compliance with this provision, the Credit
Accommodation Balance) will not exceed the Maximum Facility
Amount set forth in Section 1(a) of Schedule A and (y) none of
the other Loan Limits set forth in Section 1 of Schedule A will
be exceeded. For this purpose, "Availability" means:
the aggregate amount of Eligible Accounts (less maximum existing
or asserted taxes, discounts, credits and allowances) multiplied
by the Accounts Advance Rate set forth in Section 1(b)(i) of
Schedule A but not to exceed the Accounts Sublimit(s) set forth
in Section 1(c) of Schedule A;
plus
the lower of cost or market value of Eligible Inventory
multiplied by the Inventory Advance Rate(s) set forth in Section
1(b)(ii) of Schedule A, but not to exceed the Inventory
Sublimit(s) set forth in Section 1(d) of Schedule A;
minus
all Reserves which Lender has established pursuant to Section 1.2
(including those to be established in connection with the
requested Revolving Loan or Credit Accommodation); and
minus
the outstanding balance of all of the monetary Obligations
(excluding the Credit Accommodation Balance and the principal
balance of the Term Loan).
Term Loan. On the date of this Agreement, make an advance to
Borrower computed with respect to the value of Borrower's
Eligible Equipment (the ("Equipment Advance") in the principal
amount, if any, set forth in Section 2(a)(i) of Schedule A. The
Equipment Advance is referred to as the "Term Loan."
Reserves. Lender may from time to time establish and revise such
reserves as Lender deems appropriate in its sole discretion
("Reserves") to reflect (i) events, conditions, contingencies or
risks which affect or may affect (A) the Collateral or its value,
or the security interests and other rights of Lender in the
Collateral or (B) the assets, business or prospects of Borrower
or any Obligor, (ii) Lender's good faith concern that any
Collateral report or financial information furnished by or on
behalf of Borrower or any Obligor to Lender is or may have been
incomplete, inaccurate or misleading in any material respect,
(iii) any fact or circumstance which Lender determines in good
faith constitutes, or could constitute, a Default or Event of
Default or (iv) any other events or circumstances which Lender
determines in good faith make the establishment or revision of a
Reserve prudent. Without limiting the foregoing, Lender shall (x)
in the case of each Credit Accommodation issued for the purchase
of Inventory (a) which meets the criteria for Eligible Inventory
set forth in clauses (i), (ii), (iii), (v) and (vi) of the
definition of Eligible Inventory, (b) which is or will be in
transit to one of the locations set forth in Section 9(d) of
Schedule A, (c) which is fully insured in a manner satisfactory
to Lender and (d) in the case of any Credit Accommodation issued
for any purpose, establish a Reserve equal to the full amount of
such Credit Accommodation plus all costs and other charges and
expenses relating to such Credit Accommodation. In addition, if
the outstanding principal balance of the Term Loan advance with
respect to Eligible Equipment exceeds the percentage set forth in
Section 2(a)(i) of Schedule A of the appraised value of such
Eligible Equipment, Lender may establish an additional Reserve in
the amount of such excess. Lender may, in its discretion,
establish and revise Reserves by deducting them in determining
Availability or by reclassifying Eligible Accounts or Eligible
Inventory as ineligible. In no event shall the establishment of
a Reserve in respect of a particular actual or contingent
liability obligate Lender to make advances hereunder to pay such
liability or otherwise obligate Lender with respect thereto.
Other Provisions Applicable to Credit Accommodations. Lender
may, in its sole discretion and on terms and conditions
acceptable to Lender, make Credit Accommodations available to
Borrower either by issuing them, or by causing other financial
institutions to issue them supported by Lender's guaranty or
indemnification; provided, that after giving effect to each
Credit Accommodation, the Credit Accommodation Balance will not
exceed the Credit Accommodation Limit set forth in Section 1(e)
of Schedule A. Any amounts paid by Lender in respect of a Credit
Accommodation will be treated for all purposes as a Revolving
Loan which shall be secured by the Collateral and bear interest,
and be payable, in the same manner as a Revolving Loan. Borrower
agrees to execute all documentation required by Lender or the
issuer of any Credit Accommodation in connection with any such
Credit Accommodation.
Repayment. Accrued interest on all monetary Obligations shall be
payable on the first day of each month. Principal of the Term
Loan shall be repaid as set forth in Section 2(b) of Schedule A.
If at any time any of the Loan Limits are exceeded, Borrower will
immediately pay to Lender such amounts (or provide cash
collateral to Lender with respect to the Credit Accommodation
Balance in the manner set forth in Section 7.3), as shall cause
Borrower to be in full compliance with all of the Loan Limits.
Notwithstanding the foregoing, Lender may, in its sole
discretion, make or permit Revolving Loans, the Term Loan, any
Credit Accommodations or any other monetary Obligations to be in
excess of any of the Loan Limits; provided, that Borrower shall,
upon Lender's demand, pay to Lender such amounts as shall cause
Borrower to be in full compliance with all of the Loan Limits.
All unpaid monetary Obligations shall be payable in full on the
Maturity Date (as defined in Section 7.1) or, if earlier, the
date of any early termination pursuant to Section 7.2.
Intentionally Omitted.
INTEREST AND FEES.
Interest. All Loans and other monetary Obligations shall bear
interest at the Interest Rate(s) set forth in Section 3 of
Schedule A, except where expressly set forth to the contrary in
this Agreement or another Loan Document; provided, that after the
occurrence of an Event of Default, all Loans and other monetary
Obligations shall, at Lender's option, bear interest at a rate
per annum equal to 2% in excess of the rate otherwise applicable
thereto (the "Default Rate") until paid in full (notwithstanding
the entry of any judgment against Borrower or the exercise of any
other right or remedy by Lender), and all such interest shall be
payable on demand. Changes in the Interest Rate shall be
effective as of the date of any change in the Prime Rate.
Notwithstanding anything to the contrary contained in this
Agreement, the aggregate of all amounts deemed to be interest
hereunder and charged or collected by Lender is not intended to
exceed the highest rate permissible under any applicable law, but
if it should, such interest shall automatically be reduced to the
extent necessary to comply with applicable law and Lender will
refund to Borrower any such excess interest received by Lender.
Fees. Borrower shall pay Lender the following fees which are in
addition to all interest and other sums payable by Borrower to
Lender under this Agreement, and are not refundable:
Closing Fee. A closing fee in the amount set forth in Section
6(a) of Schedule A, which shall be deemed to be fully earned as
of, and payable on, the date hereof.
Facility Fees. A facility fee for the Initial Term in the amount
set forth in Section 6(b)(i) of Schedule A (which shall be fully
earned and payable on each anniversary of the date of this
Agreement during the Initial Term, other than the Maturity Date),
and a facility fee for each Renewal Term in the amount set forth
in Section 6(b)(ii) of Schedule A (which shall be fully earned
and payable on the first day of such Renewal Term and on each
anniversary thereof during such Renewal Term, other than the
Maturity Date).
Intentionally Omitted.
Intentionally Omitted.
Intentionally Omitted.
Intentionally Omitted.
Intentionally Omitted.
Credit Accommodation Fees. The fees relating to Credit
Accommodations set forth in Section 6(i) of Schedule A, payable,
in arrears, on the first day of each month so long as any of the
Obligations are outstanding and on the Maturity Date, plus all
costs and fees charged by the issuer, payable as and when such
costs and fees are charged.
Computation of Interest and Fees. All interest and fees shall be
calculated daily on the closing balances in the Loan Account
based on the actual number of days elapsed in a year of 360 days.
For purposes of calculating interest and fees, if the outstanding
daily principal balance of the Revolving Loans is a credit
balance, such balance shall be deemed to be zero.
Loan Account; Monthly Accountings. Lender shall maintain a loan
account for Borrower reflecting all advances, charges, expenses
and payments made pursuant to this Agreement (the "Loan
Account"), and shall provide Borrower with a monthly accounting
reflecting the activity in the Loan Account. Each accounting
shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Lender),
unless Borrower notifies Lender in writing to the contrary within
sixty days after such account is rendered, describing the nature
of any alleged errors or admissions. However, Lender's failure
to maintain the Loan Account or to provide any such accounting
shall not affect the legality or binding nature of any of the
Obligations. Interest, fees and other monetary Obligations due
and owing under this Agreement (including fees and other amounts
paid by Lender to issuers of Credit Accommodations) may, in
Lender's discretion, be charged to the Loan Account, and will
thereafter be deemed to be Revolving Loans and will bear interest
at the same rate as other Revolving Loans.
SECURITY INTEREST.
To secure the full payment and performance of all of the
Obligations, Borrower hereby grants to Lender a continuing
security interest in all of Borrower's personal property and
interests in personal property, whether tangible or intangible,
now owned or in existence or hereafter acquired or arising,
wherever located, including Borrower's interest in all of the
following, whether or not eligible for lending purposes: (i) all
Accounts, Chattel Paper, Instruments, Documents, Inventory,
Equipment and other Goods, Investment Property, General
Intangibles, Deposit Accounts and money, (ii) all proceeds and
products of all of the foregoing (including proceeds of any
insurance policies, proceeds of proceeds and claims against third
parties for loss or any destruction of any of the foregoing) and
(iii) all books and records relating to any of the foregoing.
ADMINISTRATION.
Lock Boxes and Blocked Accounts. Borrower will, at its expense,
establish (and revise from time to time as Lender may require)
collection procedures acceptable to Lender, in Lender's sole
discretion, for the collection of checks, wire transfers and
other proceeds of Accounts ("Account Proceeds"), which may
include (i) directing all Account Debtors to send all such
proceeds directly to a post office box designated by Lender
either in the name of Borrower (but as to which Lender has
exclusive access) or, at Lender's option, in the name of Lender
(a "Lock Box") or (ii) depositing all Account Proceeds received
by Borrower into one or more bank accounts maintained in Lender's
name (each, a "Blocked Account"), under an arrangement acceptable
to Lender with a depository bank acceptable to Lender, pursuant
to which all funds deposited into each Blocked Account are to be
transferred to Lender in such manner, and with such frequency, as
Lender shall specify or (iii) a combination of the foregoing.
Borrower agrees to execute, and to cause its depository banks to
execute, such Lock Box and Blocked Account agreements and other
documentation as Lender shall require from time to time in
connection with the foregoing.
Remittance of Proceeds. Except as provided in Section 4.1, all
proceeds arising from the sale or other disposition of any
Collateral shall be delivered, in kind, by Borrower to Lender in
the original form in which received by Borrower not later than
the following Business Day after receipt by Borrower. Until so
delivered to Lender, Borrower shall hold such proceeds separate
and apart from Borrower's other funds and property in an express
trust for Lender. Nothing in this Section 4.2 shall limit the
restrictions on disposition of Collateral set forth elsewhere in
this Agreement.
Application of Payments. Lender may, in its sole discretion,
apply, reverse and re-apply all cash and non-cash proceeds of
Collateral or other payments received with respect to the
Obligations, in such order and manner as Lender shall determine,
whether or not the Obligations are due, and whether before or
after the occurrence of a Default or an Event of Default. For
purposes of determining Availability, such amounts will be
credited to the Loan Account and the Collateral balances to which
they relate upon Lender's receipt of advice from Lender's Bank
(set forth in Section 11 of Schedule A) that such items have been
credited to Lender's account at Lender's Bank (or upon Lender's
deposit thereof at Lender's Bank in the case of payments received
by Lender in kind), in each case subject to final payment and
collection. However, for purposes of computing interest on the
Obligations, such items shall be deemed applied by Lender one
Business Day after Lender's receipt of advice of deposit thereof
at Lender's Bank.
Notification; Verification. Lender or its designee may, from
time to time, whether or not a Default or Event of Default has
occurred: (i) verify directly with the Account Debtors the
validity, amount and other matters relating to the Accounts and
Chattel Paper, by means of mail, telephone or otherwise, either
in the name of Borrower or Lender or such other name as Lender
may choose; (ii) notify Account Debtors that Lender has a
security interest in the Accounts and that payment thereof is to
be made directly to Lender; and (iii) demand, collect or enforce
payment of any Accounts and Chattel Paper (but without any duty
to do so).
Power of Attorney. Borrower hereby grants to Lender an
irrevocable power of attorney, coupled with an interest,
authorizing and permitting Lender (acting through any of its
officers, employees, attorneys or agents), at any time (whether
or not a Default or Event of Default has occurred and is
continuing, except as expressly provided below), at Lender's
option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the
following, in Borrower's name or otherwise: (i) execute on
behalf of Borrower any documents that Lender may, in its sole
discretion, deem advisable in order to perfect and maintain
Lender's security interests in the Collateral (including such
financing statements and continuation financing statements, and
amendments thereto, as Lender shall deem necessary or
appropriate) and to file as a financing statement any copy of
this Agreement or any financing statement signed by Borrower;
(ii) after an Event of Default execute on behalf of Borrower any
document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or lease (as lessor or
lessee) any personal property which is part of the Collateral or
in which Lender has an interest; (iii) execute on behalf of
Borrower any invoices relating to any Accounts, any draft against
any Account Debtor, any proof of claim in bankruptcy, any notice
of Lien or claim, and any assignment or satisfaction of
mechanic's, materialman's or other Lien; (iv) execute on behalf
of Borrower any notice to any Account Debtor; (v) receive and
otherwise take control in any manner of any cash or non-cash
items of payment or proceeds of Collateral; (vi) endorse
Borrower's name on all checks and other forms of remittances
received by Lender; (vii) pay, contest or settle any Lien,
charge, encumbrance, security interest and adverse claim in or to
any of the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same;
(viii) after the occurrence of a Default or Event of Default,
grant extensions of time to pay, compromise claims relating to,
and settle Accounts, Chattel Paper and General Intangibles for
less than face value and execute all releases and other documents
in connection therewith; (ix) pay any sums required on account of
Borrower's taxes or to secure the release of any Liens therefor;
(x) pay any amounts necessary to obtain, or maintain in effect,
any of the insurance described in Section 5.12; (xi) after an
Event of Default, settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain
payment therefor; (xii) instruct any third party having custody
or control of any Collateral or books or records belonging to, or
relating to, Borrower to give Lender the same rights of access
and other rights with respect thereto as Lender has under this
Agreement; and (xiii) after the occurrence of a Default or Event
of Default, change the address for delivery of Borrower's mail
and receive and open all mail addressed to Borrower. Any and all
sums paid, and any and all costs, expenses, liabilities,
obligations and reasonable attorneys' fees incurred, by Lender
with respect to the foregoing shall be added to and become part
of the Obligations, shall be payable on demand, and shall bear
interest at a rate equal to the highest interest rate applicable
to any of the Obligations. Borrower agrees that Lender's rights
under the foregoing power of attorney or any of Lender's other
rights under this Agreement or the other Loan Documents shall not
be construed to indicate that Lender is in control of the
business, management or properties of Borrower.
Disputes. Borrower shall promptly notify Lender of all disputes
or claims relating to Accounts and Chattel Paper. Borrower will
not, without Lender's prior written consent, compromise or settle
any Account or Chattel Paper for less than the full amount
thereof, grant any extension of time of payment of any Account or
Chattel Paper, release (in whole or in part) any Account Debtor
or other person liable for the payment of any Account or Chattel
Paper or grant any credits, discounts, allowances, deductions,
return authorizations or the like with respect to any Account or
Chattel Paper; except that prior to the occurrence of an Event of
Default, Borrower may take any of such actions in the ordinary
course of its business, provided that Borrower reports the same
to Lender in connection with its collateral reporting described
in Section 5.13(a).
Invoices. At Lender's request, Borrower will cause all invoices
and statements which it sends to Account Debtors or other third
parties to be marked, in a manner satisfactory to Lender, to
reflect Lender's security interest therein.
Inventory.
Returns. Provided that no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to
Borrower in the ordinary course of its business, Borrower will
promptly determine the reason for such return and promptly issue
a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to Lender). After the occurrence of an
Event of Default, Borrower will not accept any return without
Lender's prior written consent. Regardless of whether an Event
of Default has occurred, Borrower will (i) hold the returned
Inventory in trust for Lender; (ii) segregate all returned
Inventory from all of Borrower's other property; (iii)
conspicuously label the returned Inventory as Lender's property;
and (iv) immediately notify Lender of the return of such
Inventory, specifying the reason for such return, the location
and condition of the returned Inventory and, at Lender's request,
deliver such returned Inventory to Lender at an address specified
by Lender.
Other Covenants. Borrower will not, without Lender's prior
written consent, (i) store any Inventory with any warehouseman or
other third party other than as set forth in Section 9(d) of
Schedule A or (ii) sell any Inventory on a sale-or-return,
guaranteed sale, consignment, or other contingent basis. All of
the Inventory has been produced only in accordance with the Fair
Labor Standards Act of 1938 and all rules, regulations and orders
promulgated thereunder.
Access to Collateral, Books and Records. At reasonable times,
and on one Business Day's notice, prior to the occurrence of a
Default or an Event of Default, and at any time and with or
without notice after the occurrence of a Default or an Event of
Default, Lender or its agents shall have the right to inspect the
Collateral, and the right to examine and copy Borrower's books
and records. Lender shall take reasonable steps to keep
confidential all information obtained in any such inspection or
examination, but Lender shall have the right to disclose any such
information to its auditors, regulatory agencies, attorneys and
participants, and pursuant to any subpoena or other legal
process. Borrower agrees to give Lender access to any or all of
Borrower's premises to enable Lender to conduct such inspections
and examinations. Such inspections and examinations shall be at
Borrower's expense and the charge therefor shall be $650 per
person per day (or such higher amount as shall represent Lender's
then current standard charge), plus reasonable out-of-pocket
expenses. Lender may, at Borrower's expense, use Borrower's
personnel, computer and other equipment, programs, printed output
and computer readable media, supplies and premises for the
collection, sale or other disposition of Collateral to the extent
Lender, in its sole discretion, deems appropriate. Borrower
hereby irrevocably authorizes all accountants and third parties
to disclose and deliver to Lender, at Borrower's expense, all
financial information, books and records, work papers, management
reports and other information in their possession regarding
Borrower. Borrower will not enter into any agreement with any
accounting firm, service bureau or third party to store
Borrower's books or records at any location other than Borrower's
Address without first obtaining Lender's written consent (which
consent may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give Lender the same
rights with respect to access to books and records and related
rights as Lender has under this Agreement).
REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, Borrower
represents, warrants and covenants as follows (it being
understood that (i) each such representation and warranty will be
deemed remade as of the date on which each Loan is made and each
Credit Accommodation is provided and shall not be affected by any
knowledge of, or any investigation by, Lender, and (ii) the
accuracy of each such representation, warranty and covenant will
be a condition to each Loan and Credit Accommodation):
Existence and Authority. Borrower is duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation or formation. Borrower is qualified and
licensed to do business in all jurisdictions in which any failure
to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement
and all of the other Loan Documents have been duly and validly
authorized, do not violate Borrower's articles or certificate of
incorporation, by-laws or other organizational documents, or any
law or any agreement or instrument or any court order which is
binding upon Borrower or its property, do not constitute grounds
for acceleration of any indebtedness or obligation under any
agreement or instrument which is binding upon Borrower or its
property, and do not require the consent of any Person. This
Agreement and such other Loan Documents have been duly executed
and delivered by, and are enforceable against, Borrower, and all
other Obligors who have signed them, in accordance with their
respective terms. Sections 9(g) and 9(h) of Schedule A set forth
the ownership of Borrower and the names and ownership of
Borrower's Subsidiaries as of the date of this Agreement.
Name; Trade Names and Styles. The name of Borrower set forth in
the heading to this Agreement is its correct and complete legal
name as of the date hereof. Listed in Sections 9(a), 9(b) and
9(c) of Schedule A are all prior names of Borrower and all of
Borrower's present and prior trade names. Borrower shall give
Lender at least thirty days' prior written notice before changing
its name or doing business under any other name. Borrower has
complied with all laws relating to the conduct of business under
a fictitious business name. Borrower represents and warrants
that (i) each trade name does not refer to another corporation or
other legal entity; (ii) all Accounts invoiced under any such
trade names are owned exclusively by Borrower and are subject to
the security interest of Lender and the other terms of this
Agreement and (iii) all schedules of Accounts, including any
sales made or services rendered using any trade name shall show
Borrower's name as assignor.
Title to Collateral; Permitted Liens. Borrower has good and
marketable title to the Collateral. The Collateral now is and
will remain free and clear of any and all liens, charges,
security interests, encumbrances and adverse claims, except for
Permitted Liens. Lender now has, and will continue to have, a
first-priority perfected and enforceable security interest in all
of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend Lender and the Collateral
against all claims of others. None of the Collateral which is
Equipment is or will be affixed to any real property in such a
manner, or with such intent, as to become a fixture. Except for
leases or subleases as to which Borrower has delivered to Lender
a landlord's waiver in form and substance satisfactory to Lender,
Borrower is not a lessee or sublessee under any real property
lease or sublease pursuant to which the lessor or sublessor may
obtain any rights in any of the Collateral, and no such lease or
sublease now prohibits, restrains, impairs or conditions, or will
prohibit, restrain, impair or condition, Borrower's right to
remove any Collateral from the premises. Whenever any Collateral
is located upon premises in which any third party has an interest
(whether as owner, mortgagee, beneficiary under a deed of trust,
lien or otherwise), Borrower shall, whenever requested by Lender,
cause each such third party to execute and deliver to Lender, in
form and substance acceptable to Lender, such waivers and
subordinations as Lender shall specify, so as to ensure that
Lender's rights in the Collateral are, and will continue to be,
superior to the rights of any such third party. Borrower will
keep in full force and effect, and will comply with all the terms
of, any lease of real property where any of the Collateral now or
in the future may be located.
Accounts and Chattel Paper. As of each date reported by
Borrower, all Accounts which Borrower has reported to Lender as
being Eligible Accounts comply in all respects with the criteria
for eligibility established by Lender and in effect at such time.
All Accounts and Chattel Paper are genuine and in all respects
what they purport to be, arise out of a completed, bona fide and
unconditional and non-contingent sale and delivery of goods or
rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto,
each Account Debtor thereunder had the capacity to contract at
the time any contract or other document giving rise to such
Accounts and Chattel Paper were executed, and the transactions
giving rise to such Accounts and Chattel Paper comply with all
applicable laws and governmental rules and regulations.
Intentionally Omitted.
Place of Business; Location of Collateral. Borrower's Address is
Borrower's chief executive office and the location of its books
and records. In addition, except as provided in the immediately
following sentence, Borrower has places of business and
Collateral located only at the locations set forth on Sections
9(d) and 9(e) of Schedule A. Borrower will give Lender at least
thirty days' prior written notice before opening any additional
place of business, changing its chief executive office or the
location of its books and records, or moving any of the
Collateral to a location other than Borrower's Address or one of
the locations set forth in Sections 9(d) and 9(e) of Schedule A,
and will execute and deliver all financing statements and other
agreements, instruments and documents which Lender shall require
as a result thereof.
Financial Condition, Statements and Reports. All financial
statements delivered to Lender by or on behalf of Borrower have
been prepared in conformity with GAAP and completely and fairly
reflect the financial condition of Borrower, at the times and for
the periods therein stated. Between the last date covered by any
such financial statement provided to Lender and the date hereof
(or, with respect to the remaking of this representation in
connection with the making of any Loan or the providing of any
Credit Accommodation, the date such Loan is made or such Credit
Accommodation is provided), there has been no material adverse
change in the financial condition or business of Borrower.
Borrower is solvent and able to pay its debts as they come due,
and has sufficient capital to carry on its business as now
conducted and as proposed to be conducted. All schedules,
reports and other information and documentation delivered by
Borrower to Lender with respect to the Collateral are, or will
be, when delivered, true, correct and complete as of the date
delivered or the date specified therein.
Tax Returns and Payments; Pension Contributions. Borrower has
timely filed all tax returns and reports required by applicable
law, has timely paid all applicable taxes, assessments, deposits
and contributions owing by Borrower and will timely pay all such
items in the future as they became due and payable. Borrower
may, however, defer payment of any contested taxes; provided,
that Borrower (i) in good faith contests Borrower's obligation to
pay such taxes by appropriate proceedings promptly and diligently
instituted and conducted; (ii) notifies Lender in writing of the
commencement of, and any material development in, the
proceedings; (iii) posts bonds or takes any other steps required
to keep the contested taxes from becoming a Lien upon any of the
Collateral and (iv) maintains adequate reserves therefor in
conformity with GAAP. Borrower is unaware of any claims or
adjustments proposed for any of Borrower's prior tax years which
could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay, all
amounts necessary to fund all present and future pension, profit
sharing and deferred compensation plans in accordance with their
terms, and Borrower has not withdrawn from participation in,
permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan
which could result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or any
other governmental agency.
Compliance with Laws. Borrower has complied in all material
respects with all provisions of all applicable laws and
regulations, including those relating to Borrower's ownership of
real or personal property, the conduct and licensing of
Borrower's business, the payment and withholding of taxes, ERISA
and other employee matters, safety and environmental matters.
Litigation. Section 9(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best
of Borrower's knowledge) threatened against Borrower. There is
no claim, suit, litigation, proceeding or investigation pending
or (to the best of Borrower's knowledge) threatened by or against
or affecting Borrower in any court or before any governmental
agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in any material
adverse change in the financial condition or business of
Borrower, or in any material impairment in the ability of
Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly
inform Lender in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or
against Borrower.
Use of Proceeds. All proceeds of all Loans will be used solely
for lawful business purposes.
Insurance. Borrower will at all times carry property, liability
and other insurance, with insurers acceptable to Lender, in such
form and amounts, and with such deductibles and other provisions,
as Lender shall require, and Borrower will provide evidence of
such insurance to Lender, so that Lender is satisfied that such
insurance is, at all times, in full force and effect. Each
property insurance policy shall name Lender as loss payee and
shall contain a lender's loss payable endorsement in form
acceptable to Lender, each liability insurance policy shall name
Lender as an additional insured, and each business interruption
insurance policy shall be collaterally assigned to Lender, all in
form and substance satisfactory to Lender. All policies of
insurance shall provide that they may not be cancelled or changed
without at least thirty days' prior written notice to Lender,
shall contain breach of warranty coverage, and shall otherwise be
in form and substance satisfactory to Lender. Upon receipt of
the proceeds of any such insurance, Lender shall apply such
proceeds in reduction of the Obligations as Lender shall
determine in its sole discretion. Borrower will promptly deliver
to Lender copies of all reports made to insurance companies.
Financial and Collateral Reports. Borrower has kept and will
keep adequate records and books of account with respect to its
business activities and the Collateral in which proper entries
are made in accordance with GAAP reflecting all its financial
transactions, and will cause to be prepared and furnished to
Lender the following (all to be prepared in accordance with GAAP,
unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender):
Collateral Reports. On or before the fifteenth day of each
month, an aging of Borrower's Accounts, Chattel Paper and notes
receivable, and weekly Inventory reports, all in such form, and
together with such additional certificates, schedules and other
information with respect to the Collateral or the business of
Borrower or any Obligor, as Lender shall request; provided, that
Borrower's failure to execute and deliver the same shall not
affect or limit Lender's security interests and other rights in
any of the Accounts, nor shall Lender's failure to advance or
lend against a specific Account affect or limit Lender's security
interest and other rights therein. Together with each such
schedule, Borrower shall furnish Lender with copies (or, at
Lender's request, originals) of all contracts, orders, invoices,
and other similar documents, and all original shipping
instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of
which gave rise to such Accounts, and Borrower warrants the
genuineness of all of the foregoing. In addition, Borrower shall
deliver to Lender the originals of all Instruments, Chattel
Paper, security agreements, guaranties and other documents and
property evidencing or securing any Accounts, immediately upon
receipt thereof and in the same form as received, with all
necessary endorsements. Lender may destroy or otherwise dispose
of all documents, schedules and other papers delivered to Lender
pursuant to this Agreement (other than originals of Instruments,
Chattel Paper, security agreements, guaranties and other
documents and property evidencing or securing any Accounts) six
months after Lender receives them, unless Borrower requests their
return in writing in advance and arranges for their return to
Borrower at Borrower's expense.
Annual Statements. Not later than ninety days after the close of
each fiscal year of Borrower, unqualified (except for a
qualification for a change in accounting principles with which
the accountant concurs) audited financial statements of Borrower
and its Subsidiaries as of the end of such year, on a
consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing
selected by Borrower but acceptable to Lender, together with a
copy of any management letter issued in connection therewith and
a letter from such accountants acknowledging that Lender is
relying on such financial statements;
Interim Statements. Not later than fifteen days after the end of
each month hereafter, including the last month of Borrower's
fiscal year, unaudited interim financial statements of Borrower
and its Subsidiaries as of the end of such month and of the
portion of Borrower's fiscal year then elapsed, on a consolidated
and consolidating basis, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and
fairly presenting the consolidated financial position and results
of operations of Borrower and its Subsidiaries for such month and
period subject only to changes from audit and year-end
adjustments and except that such statements need not contain
notes;
Projections, Etc. Such business projections, Availability
projections, business plans, budgets and cash flow statements for
Borrower and its Subsidiaries as Lender shall request from time
to time;
Shareholder Reports, Etc. Promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements,
financial statements or reports which Borrower or any Affiliate
of Borrower has made available to its shareholders and copies of
any regular, periodic and special reports or registration
statements which Borrower or any Affiliate of Borrower files with
the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national
securities exchange;
ERISA Reports. Upon request by Lender, copies of any annual
report to be filed pursuant to the requirements of ERISA in
connection with each plan subject thereto; and
Other Information. Such other data and information (financial
and otherwise) as Lender, from time to time, may reasonably
request, bearing upon or related to the Collateral or Borrower's
and each of its Subsidiary's financial condition or results of
operations.
Litigation Cooperation. Should any third-party suit or
proceeding be instituted by or against Lender with respect to any
Collateral or in any manner relating to Borrower, Borrower shall,
without expense to Lender, make available Borrower and its
officers, employees and agents, and Borrower's books and records,
without charge, to the extent that Lender may deem them
reasonably necessary in order to prosecute or defend any such
suit or proceeding.
Maintenance of Collateral, Etc. Borrower will maintain all of
its Equipment in good working condition, ordinary wear and tear
excepted, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Lender in
writing of any material loss or damage to the Collateral and of
any investigation, action, suit, proceeding or claim relating to
the Collateral or which may result in an adverse impact upon
Borrower's business, assets or financial condition.
Notification of Changes. Borrower will promptly notify Lender in
writing of any change in its officers or directors, the opening
of any new bank account or other deposit account, or any material
adverse change in the business or financial affairs of Borrower
or the existence of any circumstance which would make any
representation or warranty of Borrower untrue in any material
respect or constitute a material breach of any covenant of
Borrower.
Further Assurances. Borrower agrees, at its expense, to take all
actions, and execute or cause to be executed and delivered to
Lender all promissory notes, security agreements, agreements with
landlords, mortgagees and processors and other bailees,
subordination and intercreditor agreements and other agreements,
instruments and documents as Lender may request from time to
time, to perfect and maintain Lender's security interests in the
Collateral and to fully effectuate the transactions contemplated
by this Agreement.
Negative Covenants. Except as set forth in Section 13 of
Schedule A, Borrower will not, without Lender's prior written
consent, (i) merge or consolidate with another Person, form any
new Subsidiary or acquire any interest in any Person; (ii)
acquire any assets except in the ordinary course of business and
as otherwise permitted by this Agreement and the other Loan
Documents; (iii) enter into any transaction outside the ordinary
course of business; (iv) sell or transfer any Collateral or other
assets, except that Borrower may sell finished goods Inventory in
the ordinary course of its business, and Borrower may transfer
certain of its assets located in Sterling Heights, Michigan to
ACC so long as no Event of Default exists and ACC executes such
documents as Lender requests to insure Lender has a first
priority lien on the assets of ACC; (v) make any loans to, or
investments in, any Affiliate or other Person in the form of
money or other assets, except that provided no Event of Default
exists, Borrower may make loans to any Affiliate or subsidiary of
Borrower, provided, that the aggregate outstanding principal
amount of such loans outstanding at any one time shall not exceed
$1,000,000; (vi) incur any debt outside the ordinary course of
business; (vii) guaranty or otherwise become liable with respect
to the obligations of another party or entity, except that
Borrower shall be permitted to guaranty the obligations of its
subsidiary, Raybestos U.K., Ltd. arising under or relating to
such subsidiary's lease of real property; (viii) pay or declare
any dividends or other distributions on Borrower's stock, if
Borrower is a corporation (except for dividends payable solely in
capital stock of Borrower) or with respect to any equity
interests, if Borrower is not a corporation; (ix) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of
Borrower's capital stock or other equity interests; (x) make any
change in Borrower's capital structure, provided no Event of
Default then exists, Borrower may sell, assign or otherwise
transfer not more than 30% of its issued and outstanding capital
stock, provided, that after giving effect to any such sale,
assignment or transfer, the controlling ownership of Borrower
remains unchanged; (xi) dissolve or elect to dissolve; (xii) pay
any principal or interest on any indebtedness owing to an
Affiliate, (xiii) enter into any transaction with an Affiliate
other than on arms-length terms, except that Borrower may sell
Inventory, at Borrower's cost, to its Affiliates and subsidiaries
as set forth on Schedule C attached hereto; or (xiv) agree to do
any of the foregoing.
Notwithstanding anything to the contrary contained herein,
Borrower shall be permitted to declare, make or pay a
distribution to Raytech Composites, Inc. or Raymark Industries,
Inc.; provided, that in each instance, Borrower provides Lender
with five business days prior written notice to the date of any
contemplated distribution or payment ("Distribution Date") and
that, as of the Distribution Date, (i) no Event of Default then
exists, (ii) Borrower has no payables which are past due for more
than one hundred twenty days after invoice date, and (iii) the
Availability, as determined by Lender is not less than
$1,000,000, after giving effect to any such contemplated
distribution or payment.
Intentionally Omitted.
RELEASE AND INDEMNITY.
Release. Borrower hereby releases Lender and its Affiliates and
their respective directors, officers, employees, attorneys and
agents and any other Person affiliated with or representing
Lender (the "Released Parties") from any and all liability
arising from acts or omissions under or pursuant to this
Agreement, whether based on errors of judgment or mistake of law
or fact, except for those arising from willful misconduct.
However, in no circumstance will any of the Released Parties be
liable for lost profits or other special or consequential
damages. Such release is made on the date hereof and remade upon
each request for a Loan or Credit Accommodation by Borrower.
Without limiting the foregoing:
Lender shall not be liable for (i) any shortage or discrepancy
in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gave rise to an Account; (ii) any
error, act, omission, or delay of any kind occurring in the
settlement, failure to settle, collection or failure to collect
any Account; (iii) settling any Account in good faith for less
than the full amount thereof; or (iv) any of Borrower's
obligations under any contract or agreement giving rise to an
Account; and
In connection with Credit Accommodations or any underlying
transaction, Lender shall not be responsible for the conformity
of any goods to the documents presented, the validity or
genuineness of any documents, delay, default or fraud by
Borrower, shippers and/or any other Person. Borrower agrees that
any action taken by Lender, if taken in good faith, or any action
taken by an issuer of any Credit Accommodation, under or in
connection with any Credit Accommodation, shall be binding on
Borrower and shall not create any resulting liability to Lender.
In furtherance thereof, Lender shall have the full right and
authority to clear and resolve any questions of non-compliance of
documents, to give any instructions as to acceptance or rejection
of any documents or goods, to execute for Borrower's account any
and all applications for steamship or airway guaranties,
indemnities or delivery orders, to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any
drafts, acceptances or documents, and to agree to any amendments,
renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the Credit
Accommodations or applications and other documentation pertaining
thereto.
Indemnity. Borrower hereby agrees to indemnify the Released
Parties and hold them harmless from and against any and all
claims, debts, liabilities, demands, obligations, actions, causes
of action, penalties, costs and expenses (including attorneys'
fees), of every nature, character and description, which the
Released Parties may sustain or incur based upon or arising out
of any of the transactions contemplated by this Agreement or the
other Loan Documents or any of the Obligations, including any
transactions or occurrences relating to the issuance of any
Credit Accommodation, the Collateral relating thereto, any drafts
thereunder and any errors or omissions relating thereto
(including any loss or claim due to any action or inaction taken
by the issuer of any Credit Accommodation) (and for this purpose
any charges to Lender by any issuer of Credit Accommodations
shall be conclusive as to their appropriateness and may be
charged to the Loan Account), or any other matter, cause or thing
whatsoever occurred, done, omitted or suffered to be done by
Lender relating to Borrower or the Obligations (except any such
amounts sustained or incurred as the result of the willful
misconduct of the Released Parties). Notwithstanding any
provision in this Agreement to the contrary, the indemnity
agreement set forth in this Section shall survive any termination
of this Agreement.
TERM.
Maturity Date. Lender's obligation to make Loans and to provide
Credit Accommodations under this Agreement shall initially
continue in effect until the Initial Maturity Date set forth in
Section 7 of Schedule A (the "Initial Term"); provided, that such
date shall automatically be extended (the Initial Maturity Date,
as it may be so extended, being referred to as the "Maturity
Date") for successive additional terms of three years each (each
a "Renewal Term"), unless one party gives written notice to the
other, not less than sixty days prior to the Maturity Date, that
such party elects not to extend the Maturity Date. This
Agreement and the other Loan Documents and Lender's security
interests in and Liens upon the Collateral, and all
representations, warranties and covenants of Borrower contained
herein and therein, shall remain in full force and effect after
the Maturity Date until all of the monetary Obligations are
indefeasibly paid in full.
Early Termination. Lender's obligation to make Loans and to
provide Credit Accommodations under this Agreement may be
terminated prior to the Maturity Date as follows: (i) by
Borrower, effective thirty business days after written notice of
termination is given to Lender or (ii) by Lender at any time
after the occurrence of an Event of Default, without notice,
effective immediately; provided, that if any Affiliate of
Borrower is also a party to a financing arrangement with Lender,
no such early termination shall be effective unless such
Affiliate simultaneously terminates its financing arrangement
with Lender.
Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay in full all
Obligations, whether or not all or any part of such Obligations
are otherwise then due and payable. Without limiting the
generality of the foregoing, if, on the Maturity Date or on any
earlier effective date of termination, there are any outstanding
Credit Accommodations, then on such date Borrower shall provide
to Lender cash collateral in an amount equal to 110% of the
Credit Accommodation Balance to secure all of the Obligations
(including estimated attorneys' fees and other expenses) relating
to said Credit Accommodations or such greater percentage or
amount as Lender reasonably deems appropriate, pursuant to a cash
pledge agreement in form and substance satisfactory to Lender.
Effect of Termination. No termination shall affect or impair any
right or remedy of Lender or relieve Borrower of any of the
Obligations until all of the monetary Obligations have been
indefeasibly paid in full. Upon indefeasible payment and
performance in full of all of the monetary Obligations (and the
provision of cash collateral with respect to any Credit
Accommodation Balance as required by Section 7.3) and termination
of this Agreement, Lender shall promptly deliver to Borrower
termination statements, requests for reconveyances and such other
documents as may be reasonably required to terminate Lender's
security interests in the Collateral.
EVENTS OF DEFAULT AND REMEDIES.
Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and
Borrower shall give Lender immediate written notice thereof: (i)
if any warranty, representation, statement, report or certificate
made or delivered to Lender by Borrower or any of Borrower's
officers, employees or agents is untrue or misleading; (ii) if
Borrower fails to pay when due any principal or interest on any
Loan or any other monetary Obligation; (iii) if Borrower breaches
any covenant or obligation contained in this Agreement or any
other Loan Document or fails to perform any other non-monetary
Obligation; (iv) if any levy, assessment, attachment, seizure,
lien or encumbrance (other than a Permitted Lien) is made or
permitted to exist on all or any part of the Collateral; (v) if
one or more judgments aggregating in excess of $100,000, or any
injunction or attachment, is obtained against Borrower or any
Obligor which remains unstayed for more than ten days or is
enforced; (vi) the occurrence of any default under any financing
agreement, security agreement or other agreement, instrument or
document executed and delivered by (A) Borrower with, or in favor
of, any Person other than Lender or (B) Borrower or any Affiliate
of Borrower with, or in favor of, Lender or any Affiliate of
Lender; (vii) the dissolution, death, termination of existence in
good standing, insolvency or business failure or suspension or
cessation of business as usual of Borrower or any Obligor (or of
any general partner of Borrower or any Obligor if it is a
partnership) or the appointment of a receiver, trustee or
custodian for all or any part of the property of, or an
assignment for the benefit of creditors by Borrower or any
Obligor, or the commencement of any proceeding by Borrower or any
Obligor under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect,
or if Borrower makes or sends a notice of a bulk transfer or
calls a meeting of its creditors; (viii) the commencement of any
proceeding against Borrower or any Obligor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment
of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; (ix) the actual or
attempted revocation or termination of, or limitation or denial
of liability upon, any guaranty of the Obligations, or any
security document securing the Obligations, by any Obligor; (x)
if Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement, or
if any Person who has subordinated such indebtedness or
obligations attempts to limit or terminate its subordination
agreement; (xi) if there is any actual or threatened indictment
of Borrower or any Obligor under any criminal statute or
commencement or threatened commencement of criminal or civil
proceedings against Borrower or any Obligor, pursuant to which
the potential penalties or remedies sought or available include
forfeiture of any property of Borrower or such Obligor; (xii) if
there is a change in the record or beneficial ownership of an
aggregate of more than 20% of the outstanding shares of stock of
Borrower (or partnership or membership interests if it is a
partnership or limited liability company), in one or more
transactions, compared to the ownership of outstanding shares of
stock (or partnership or membership interests) of Borrower as of
the date hereof, without the prior written consent of Lender;
(xiii) if there is any change in the chief executive officer,
chief operating officer or chief financial officer of Borrower;
(xiv) if an Event of Default occurs under any Loan and Security
Agreement between Lender and an Affiliate of Borrower; or (xv) if
Lender determines in good faith that the Collateral is
insufficient to fully secure the Obligations or that the prospect
of payment of performance of the Obligations is impaired.
Remedies. Upon the occurrence of any Default, and at any time
thereafter, Lender, at its option, may cease making Loans or
otherwise extending credit to Borrower under this Agreement or
any other Loan Document. Upon the occurrence of any Event of
Default, and at any time thereafter, Lender, at its option, and
without notice or demand of any kind (all of which are hereby
expressly waived by Borrower), may do any one or more of the
following: (i) cease making Loans or otherwise extending credit
to Borrower under this Agreement or any other Loan Document; (ii)
accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any
deferred or installment payments allowed by any instrument
evidencing or relating to any of the Obligations; (iii) take
possession of any or all of the Collateral wherever it may be
found, and for that purpose Borrower hereby authorizes Lender,
without judicial process, to enter onto any of Borrower's
premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain (or
cause a custodian to remain) on the premises in exclusive control
thereof, without charge for so long as Lender deems it reasonably
necessary in order to complete the enforcement of its rights
under this Agreement or any other agreement; provided, that if
Lender seeks to take possession of any of the Collateral by court
process, Borrower hereby irrevocably waives (A) any bond and any
surety or security relating thereto required by law as an
incident to such possession, (B) any demand for possession prior
to the commencement of any suit or action to recover possession
thereof and (C) any requirement that Lender retain possession of,
and not dispose of, any such Collateral until after trial or
final judgment; (iv) require Borrower to assemble any or all of
the Collateral and make it available to Lender at one or more
places designated by Lender which are reasonably convenient to
Lender and Borrower, and to remove the Collateral to such
locations as Lender may deem advisable; (v) complete the
processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of
removal, Lender shall have the right to use Borrower's premises,
vehicles and other Equipment and all other property without
charge; (vi) sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Lender obtains
possession of it or after further manufacturing, processing or
repair, at one or more public or private sales, in lots or in
bulk, for cash, exchange or other property, or on credit (a
"Sale"), and to adjourn any such Sale from time to time without
notice other than oral announcement at the time scheduled for
Sale (and, in connection therewith, (A) Lender shall have the
right to conduct such Sale on Borrower's premises without charge,
for such times as Lender deems reasonable, on Lender's premises,
or elsewhere, and the Collateral need not be located at the place
of Sale; (B) Lender may directly or through any of its Affiliates
purchase or lease any of the Collateral at any such public
disposition, and if permissible under applicable law, at any
private disposition and (C) any Sale of Collateral shall not
relieve Borrower of any liability Borrower may have if any
Collateral is defective as to title, physical condition or
otherwise at the time of sale); (vii) demand payment of and
collect any Accounts, Chattel Paper, Instruments and General
Intangibles included in the Collateral and, in connection
therewith, Borrower irrevocably authorizes Lender to endorse or
sign Borrower's name on all collections, receipts, Instruments
and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with
respect to any item of Collateral or proceeds thereof and, in
Lender's sole discretion, to grant extensions of time to pay,
compromise claims and settle Accounts, General Intangibles and
the like for less than face value; and (viii) demand and receive
possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation
thereof or relating thereto. In addition to the foregoing
remedies, upon the occurrence of any Event of Default resulting
from a breach of any of the financial covenants set forth in
Section 5.19, Lender may, at its option, upon not less than ten
days' prior notice to Borrower, reduce any or all of the Advance
Rates set forth in Section 1(b) of Schedule A to the extent
Lender, in its sole discretion, deems appropriate. In addition
to the rights and remedies set forth above, Lender shall have all
the other rights and remedies accorded a secured party after
default under the UCC and under all other applicable laws, and
under any other Loan Document, and all of such rights and
remedies are cumulative and non-exclusive. Exercise or partial
exercise by Lender of one or more of its rights or remedies shall
not be deemed an election or bar Lender from subsequent exercise
or partial exercise of any other rights or remedies. The failure
or delay of Lender to exercise any rights or remedies shall not
operate as a waiver thereof, but all rights and remedies shall
continue in full force and effect until all of the Obligations
have been fully paid and performed. If notice of any sale or
other disposition of Collateral is required by law, notice at
least seven days prior to the sale designating the time and place
of sale in the case of a public sale or the time after which any
private sale or other disposition is to be made shall be deemed
to be reasonable notice, and Borrower waives any other notice.
If any Collateral is sold or leased by Lender on credit terms or
for future delivery, the Obligations shall not be reduced as a
result thereof until payment is collected by Lender.
Application of Proceeds. Subject to any application required by
law, all proceeds realized as the result of any Sale shall be
applied by Lender to the Obligations in such order as Lender
shall determine in its sole discretion. Any surplus shall be
paid to Borrower or other persons legally entitled thereto; but
Borrower shall remain liable to Lender for any deficiency. If
Lender, in its sole discretion, directly or indirectly enters
into a deferred payment or other credit transaction with any
purchaser at any Sale, Lender shall have the option, exercisable
at any time, in its sole discretion, of either reducing the
Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual
receipt by Lender of the cash therefor.
GENERAL PROVISIONS.
Notices. All notices to be given under this Agreement shall be
in writing and shall be given either personally, by reputable
private delivery service, by regular first-class mail or
certified mail return receipt requested, addressed to Lender or
Borrower at the address shown in the heading to this Agreement,
or by facsimile to the facsimile number shown in Section 9(i) of
Schedule A, or at any other address (or to any other facsimile
number) designated in writing by one party to the other party in
the manner prescribed in this Section 9.1. All notices shall be
deemed to have been given when received or when delivery is
refused by the recipient.
Severability. If any provision of this Agreement, or the
application thereof to any party or circumstance, is held to be
void or unenforceable by any court of competent jurisdiction,
such defect shall not affect the remainder of this Agreement,
which shall continue in full force and effect.
Integration. This Agreement and the other Loan Documents
represent the final, entire and complete agreement between
Borrower and Lender and supersede all prior and contemporaneous
negotiations, oral representations and agreements, all of which
are merged and integrated into this Agreement. THERE ARE NO ORAL
UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES
WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS.
Waivers. The failure of Lender at any time or times to require
Borrower to strictly comply with any of the provisions of this
Agreement or any other Loan Documents shall not waive or diminish
any right of Lender later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect
any other default, whether prior or subsequent, and whether or
not similar. None of the provisions of this Agreement or any
other Loan Document shall be deemed to have been waived by any
act or knowledge of Lender or its agents or employees, but only
by a specific written waiver signed by an authorized officer of
Lender and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper,
Instrument, Account, General Intangible, Document, Chattel Paper,
Investment Property or guaranty at any time held by Lender on
which Borrower is or may in any way be liable, and notice of any
action taken by Lender, unless expressly required by this
Agreement, and notice of acceptance hereof.
Amendment. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Borrower and
a duly authorized officer of Lender.
Time of Essence. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement and
the other Loan Documents.
Attorneys Fees and Costs. Borrower shall reimburse Lender for
all reasonable attorneys' and paralegals' fees (including
in-house attorneys and paralegals employed by Lender) and all
filing, recording, search, title insurance, appraisal, audit, and
other costs incurred by Lender, pursuant to, in connection with,
or relating to this Agreement, including all reasonable
attorneys' fees and costs Lender incurs to prepare and negotiate
this Agreement and the other Loan Documents; to obtain legal
advice in connection with this Agreement and the other Loan
Documents or Borrower or any Obligor; to administer this
Agreement and the other Loan Documents (including the cost of
periodic financing statement, tax lien and other searches
conducted by Lender); to enforce, or seek to enforce, any of its
rights; prosecute actions against, or defend actions by, Account
Debtors; to commence, intervene in, or defend any action or
proceeding; to enforce and protect, or to seek to enforce and
protect, any of its rights and interests in any bankruptcy case
of Borrower, including, without limitation, by initiating and
prosecuting any motion for relief from the automatic stay and by
initiating, prosecuting or defending any other contested matter
or adversary proceeding in bankruptcy; to file or prosecute any
probate claim, bankruptcy claim, third-party claim, or other
claim; to examine, audit, copy, and inspect any of the Collateral
or any of Borrower's books and records; to protect, obtain
possession of, lease, dispose of, or otherwise enforce Lender's
security interests in, the Collateral; and to otherwise represent
Lender in any litigation relating to Borrower. If either Lender
or Borrower files any lawsuit against the other predicated on a
breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and attorneys'
fees, including reasonable attorneys' fees and costs incurred in
the enforcement of, execution upon or defense of any order,
decree, award or judgment. All attorneys' fees and costs to
which Lender may be entitled pursuant to this Section shall
immediately become part of the Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations.
Benefit of Agreement; Assignability. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
respective successors, assigns, heirs, beneficiaries and
representatives of Borrower and Lender; provided, that Borrower
may not assign or transfer any of its rights under this Agreement
without the prior written consent of Lender, and any prohibited
assignment shall be void. No consent by Lender to any assignment
shall release Borrower from its liability for any of the
Obligations.
Headings; Construction. Section and subsection headings are used
in this Agreement only for convenience. Borrower and Lender
acknowledge that the headings may not describe completely the
subject matter of the applicable Sections or subsections, and the
headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement.
This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision
of this Agreement shall be construed strictly against Lender or
Borrower under any rule of construction or otherwise.
GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE
BEEN MADE, IN NEW YORK, NEW YORK, AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE. BORROWER
HEREBY CONSENTS AND AGREES THAT THE STATE AND FEDERAL COURTS IN
NEW YORK, NEW YORK OR THE STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER
PERTAINING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENTS OR ANY
MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS. BORROWER ALSO AGREES THAT ANY CLAIM OR DISPUTE
BROUGHT BY BORROWER AGAINST LENDER PURSUANT TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY
IN THE STATE AND FEDERAL COURTS OF NEW YORK. BORROWER HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE
OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE
MANNER AND SHALL BE DEEMED RECEIVED AS SET FORTH IN SECTION 9.1
FOR NOTICES, TO THE EXTENT PERMITTED BY LAW. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER
THIS AGREEMENT TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM
OR JURISDICTION.
WAIVER OF JURY TRIAL, ETC. BORROWER WAIVES (i) THE RIGHT TO
TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL
OR ANY CONDUCT, ACTS OR OMISSIONS OF LENDER OR BORROWER OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR
AGENTS OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE; (ii) THE RIGHT
TO INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF
ANY KIND IN ANY ACTION OR PROCEEDING INSTITUTED BY LENDER WITH
RESPECT TO THE LOAN DOCUMENTS OR ANY MATTER RELATING THERETO,
EXCEPT FOR COMPULSORY COUNTERCLAIMS; (iii) NOTICE PRIOR TO
LENDER'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES AND (iv) THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS.
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT
LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
IN WITNESS WHEREOF, Borrower and Lender have signed this
Agreement as of the date set forth in the heading.
Borrower:
RAYBESTOS PRODUCTS COMPANY
By
Its
Lender:
NationsCredit Commercial Corporation, through its NationsCredit
Commercial Funding Division
By
Its Authorized Signatory
Schedule A
Description of Certain Terms
This Schedule is an integral part of the Loan and Security
Agreement between RAYBESTOS PRODUCTS COMPANY and NATIONSCREDIT
COMMERCIAL CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION (the "Agreement").
Loan Limits for Revolving Loans:
Maximum Facility Amount:
$17,000,000
Advance Rates:
Accounts Advance Rate:
85%; provided, that if the Dilution Percentage exceeds 2%, such
advance rate will be reduced by the number of full or partial
percentage points of such excess
Inventory Advance Rate(s):
Finished goods:
50%
Raw materials:
50%
Accounts Sublimits:
Sublimit on advances against Eligible Accounts described in
clause (vii)(C) of the definition of Eligible Accounts:
$500,000
Inventory Sublimit(s):
Overall sublimit on advances against Eligible Inventory:
$5,000,000 or, if less, the aggregate advances against Accounts
at any time of determination
Credit Accommodation Limit:
$0
Loan Limits for Term Loan:
Principal Amount:
Equipment Advance
The lesser of $7,000,000 and 115% of the appraised auction sale
value of Borrower's Eligible Equipment
Repayment Schedule:
Equipment Advance:
The Equipment Advance shall be repaid in equal consecutive
monthly installments amortized over 72 months payable on the
first day of each calendar month commencing January 1, 1998, with
the entire unpaid balance due and payable on the Maturity Date
Interest Rates:
Revolving Loans:
0.50% per annum in excess of the Prime Rate
Term Loan:
0.50% per annum in excess of the Prime Rate
Intentionally Omitted
Maximum Days:
Maximum days after original invoice date for Eligible Accounts:
90
Maximum days after original invoice due date for Eligible
Accounts:
Not applicable
Fees:
Closing Fee:
$65,000
Facility Fee:
Initial Term:
$85,000
Renewal Term(s):
$85,000
Intentionally Omitted
Intentionally Omitted
Intentionally Omitted
Intentionally Omitted
Intentionally Omitted
Intentionally Omitted
Fees for letters of credit and other Credit Accommodations (or
guaranties thereof by Lender):
Not applicable
Initial Maturity Date:
November 21, 2002
Intentionally Omitted
Borrower Information:
Prior Names of Borrower:
Raybestos Industrial Products Company
Prior Trade Names of Borrower:
None
Existing Trade Names of Borrower:
"Raybestos"
Inventory Locations:
Attached as Exhibit A9(d)
Other Locations:
Attached as Exhibit A9(e)
Litigation:
Attached as Exhibit A9(f)
Ownership of Borrower:
Raytech Composites, Inc. - 100%
Subsidiaries (and ownership thereof):
Raybestos U.K. Limited (England)
Facsimile Numbers:
Borrower:
(000) 000-0000
Lender:
(000) 000-0000
Description of Real Property:
Attached as Exhibit A10
Lender's Bank:
Marine Midland Bank N.A. (Buffalo, New York)
Other Covenants:
None
Exceptions to Negative Covenants:
None
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule
A as of the date set forth in the heading to the Agreement.
Borrower:
Raybestos Products Company
By
Its
Lender:
NationsCredit Commercial Corporation, through its NationsCredit
Commercial Funding Division
By
Its Authorized Signatory
Schedule B
Definitions
This Schedule is an integral part of the Loan and Security
Agreement between RAYBESTOS PRODUCTS COMPANY and NATIONSCREDIT
COMMERCIAL CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION (the "Agreement").
As used in the Agreement, the following terms have the following
meanings:
"ACC" means Automotive Composite Company, a Delaware corporation
and an Affiliate of Borrower.
"Account" means any right to payment for Goods sold or leased or
for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not it has been earned by performance.
"Account Debtor" means the obligor on an Account or Chattel
Paper.
"Account Proceeds" has the meaning set forth in Section 4.1.
"Affiliate" means, with respect to any Person, a relative,
partner, shareholder, member, manager, director, officer, or
employee of such Person, any parent or subsidiary of such Person,
or any Person controlling, controlled by or under common control
with such Person or any other Person affiliated, directly or
indirectly, by virtue of family membership, ownership, management
or otherwise.
"Agreement" and "this Agreement" mean the Loan and Security
Agreement of which this Schedule B is a part and the Schedules
thereto.
"Availability" has the meaning set forth in Section 1.1(a)
"Bankruptcy Code" means the United States Bankruptcy Code (11
U.S.C. Sec. 101 et seq.).
"Blocked Account" has the meaning set forth in Section 4.1.
"Borrower" has the meaning set forth in the heading to the
Agreement.
"Borrower's Address" has the meaning set forth in the heading to
the Agreement.
"Business Day" means a day other than a Saturday or Sunday or any
other day on which Lender or banks in New York are authorized to
close.
"Chattel Paper" has the meaning set forth in the UCC.
"Collateral" means all property and interests in property in or
upon which a security interest or other Lien is granted pursuant
to this Agreement or the other Loan Documents.
"Credit Accommodation" has the meaning set forth in Section
1.1(a).
"Credit Accommodation Balance" means the sum of (i) the aggregate
undrawn face amount of all outstanding Credit Accommodations and
(ii) all interest, fees and costs due or, in Lender's estimation,
likely to become due in connection therewith.
"Default" means any event which with notice or passage of time,
or both, would constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 2.1.
"Deposit Account" has the meaning set forth in the UCC.
"Dilution Percentage" means the gross amount of all returns,
allowances, discounts, credits, write-offs and similar items
relating to Borrower's Accounts computed as a percentage of
Borrower's gross sales, calculated on a ninety day rolling
average.
"Document" has the meaning set forth in the UCC.
"Early Termination Fee" has the meaning set forth in Section 7.2.
"Eligible Account" means, at any time of determination, an
Account which satisfies the general criteria set forth below and
which is otherwise acceptable to Lender (provided, that Lender
may, in its sole discretion, on fifteen days' prior written
notice to Borrower, change the general criteria for acceptability
of Eligible Accounts upon at least fifteen days' prior notice to
Borrower). An Account shall be deemed to meet the current
general criteria if (i) neither the Account Debtor nor any of its
Affiliates is an Affiliate, creditor or supplier of Borrower;
(ii) it does not remain unpaid more than the earlier to occur of
(A) the number of days after the original invoice date set forth
in Section 5(a) of Schedule A or (B) the number of days after the
original invoice due date set forth in Section 5(b) of Schedule
A; (iii) the Account Debtor or its Affiliates are not past due on
other Accounts owing to Borrower comprising more than 50% of all
of the Accounts owing to Borrower by such Account Debtor or its
Affiliates; (iv) all Accounts owing by the Account Debtor (other
than Caterpillar, Inc. or its Affiliates) or its Affiliates do
not represent more than 20% of all otherwise Eligible Accounts
and if the Account Debtor is Caterpillar, Inc. or its Affiliates,
all Accounts owing by Caterpillar, Inc. or its Affiliates do not
represent more than 35% of all otherwise Eligible Accounts
(provided, that Accounts which are deemed to be ineligible solely
by reason of this clause (iv) shall be considered Eligible
Accounts to the extent of the amount thereof which does not
exceed the respective percentages set forth above of all
otherwise Eligible Accounts); (v) no covenant, representation or
warranty contained in this Agreement with respect to such Account
(including any of the representations set forth in Section 5.4)
has been breached; (vi) the Account is not subject to any contra
relationship, counterclaim, dispute or set-off (provided, that
Accounts which are deemed to be ineligible solely by reason of
this clause (vi) shall be considered Eligible Accounts to the
extent of the amount thereof which is not affected by such contra
relationships, counterclaims, disputes or set-offs); (vii) the
Account Debtor's chief executive office or principal place of
business is located in the United States or Provinces of Canada
which have adopted the Personal Property Security Act or a
similar act, unless (A) the sale is fully backed by a letter of
credit, guaranty or acceptance acceptable to Lender in its sole
discretion, and if backed by a letter of credit, such letter of
credit has been issued or confirmed by a bank satisfactory to
Lender, is sufficient to cover such Account, and if required by
Lender, the original of such letter of credit has been delivered
to Lender or Lender's agent and the issuer thereof notified of
the assignment of the proceeds of such letter of credit to
Lender, (B) such Account is subject to credit insurance payable
to Lender issued by an insurer and on terms and in an amount
acceptable to Lender or (C) such Account Debtor's chief executive
office or principal place of business is located outside the
United States but such Account Debtor is an Affiliate of another
Account Debtor of Borrower whose chief executive office or
principal place of business is located in the United States;
(viii) it is absolutely owing to Borrower and does not arise from
a sale on a xxxx-and-hold, guarantied sale, sale-or-return,
sale-on-approval, consignment, retainage or any other repurchase
or return basis or consist of progress xxxxxxxx; (ix) Lender
shall have verified the Account in a manner satisfactory to
Lender; (x) the Account Debtor is not the United States of
America or any state or political subdivision (or any department,
agency or instrumentality thereof), unless Borrower has complied
with the Assignment of Claims Act of 1940 (31 U.S.C. Sec. 203 et
seq.) or other applicable similar state or local law in a manner
satisfactory to Lender; (xi) it is at all times subject to
Lender's duly perfected, first priority security interest and to
no other Lien that is not a Permitted Lien, and the goods giving
rise to such Account (A) were not, at the time of sale, subject
to any Lien except Permitted Liens and (B) have been delivered to
and accepted by the Account Debtor, or the services giving rise
to such Account have been performed by Borrower and accepted by
the Account Debtor; (xii) the Account is not evidenced by Chattel
Paper or an Instrument of any kind and has not been reduced to
judgment; (xiii) the Account Debtor's total indebtedness to
Borrower does not exceed the amount of any credit limit
established by Borrower or Lender and the Account Debtor is
otherwise deemed to be creditworthy by Lender (provided, that
Accounts which are deemed to be ineligible solely by reason of
this clause (xiii) shall be considered Eligible Accounts to the
extent the amount of such Accounts does not exceed the lower of
such credit limits); (xiv) there are no facts or circumstances
existing, or which could reasonably be anticipated to occur,
which might result in any adverse change in the Account Debtor's
financial condition or impair or delay the collectibility of all
or any portion of such Account; (xv) Lender has been furnished
with all documents and other information pertaining to such
Account which Lender has requested, or which Borrower is
obligated to deliver to Lender, pursuant to this Agreement; (xvi)
Borrower has not made an agreement with the Account Debtor to
extend the time of payment thereof beyond the time periods set
forth in clause (ii) above; and (xvii) Borrower has not posted a
surety or other bond in respect of the contract under which such
Account arose.
"Eligible Equipment" means, at any time of determination,
Equipment owned by Borrower which Lender, in its sole discretion,
deems to be eligible for borrowing purposes.
"Eligible Inventory" means, at any time of determination,
Inventory (other than packaging materials and supplies) which
satisfies the general criteria set forth below and which is
otherwise acceptable to Lender (provided, that Lender may, in its
sole discretion, change the general criteria for acceptability of
Eligible Inventory upon at least fifteen days' prior written
notice to Borrower). Inventory shall be deemed to meet the
current general criteria if (i) it consists of raw materials or
finished goods; (ii) it is in good, new and saleable condition;
(iii) it is not slow-moving, obsolete, unmerchantable, returned
or repossessed; (iv) it is not in the possession of a processor,
consignee or bailee, or located on premises leased or subleased
to Borrower, or on premises subject to a mortgage in favor of a
Person other than Lender, unless such processor, consignee,
bailee or mortgagee or the lessor or sublessor of such premises,
as the case may be, has executed and delivered all documentation
which Lender shall require to evidence the subordination or other
limitation or extinguishment of such Person's rights with respect
to such Inventory and Lender's right to gain access thereto; (v)
it meets all standards imposed by any governmental agency or
authority; (vi) it conforms in all respects to any covenants,
warranties and representations set forth in the Agreement; (vii)
it is at all times subject to Lender's duly perfected, first
priority security interest and no other Lien except a Permitted
Lien; and (viii) it is situated at an Inventory Location listed
in Section 9(d) of Schedule A or other location of which Lender
has been notified as required by Section 5.6.
"Equipment" means all Goods which are used or bought for use
primarily in business (including farming or a profession) or by a
Person who is a non-profit organization or governmental
subdivision or agency and which are not Inventory, farm products
or consumer goods, including all machinery, molds, machine tools,
motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dies and jigs, and all
attachments, accessories, accessions, replacements,
substitutions, additions or improvements to, or spare parts for,
any of the foregoing.
"Equipment Advance" has the meaning set forth in Section 1.1(b).
"ERISA" means the Employee Retirement Income Security Act of 1974
and all rules, regulations and orders promulgated thereunder.
"Event of Default" has the meaning set forth in Section 8.1.
"GAAP" means generally accepted accounting principles as in
effect from time to time, consistently applied.
"General Intangibles" has the meaning set forth in the UCC, and
includes all books and records pertaining to the Collateral and
other business and financial records in the possession of
Borrower or any other Person, inventions, designs, drawings,
blueprints, patents, patent applications, trademarks, trademark
applications (other than "intent to use" applications until a
verified statement of use is filed with respect to such
applications) and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and
other deposits, causes of action and other rights in all
litigation presently or hereafter pending for any cause or claim
(whether in contract, tort or otherwise), and all judgments now
or hereafter arising therefrom, rights to purchase or sell real
or personal property, rights as a licensor or licensee of any
kind, royalties, telephone numbers, internet addresses,
proprietary information, purchase orders, and all insurance
policies and claims (including life insurance, key man insurance,
credit insurance, liability insurance, property insurance and
other insurance), tax refunds and claims, letters of credit,
banker's acceptances and guaranties, computer programs, discs,
tapes and tape files in the possession of Borrower or any other
Person, claims under guaranties, security interests or other
security held by or granted or assigned to Borrower, all rights
to indemnification and all other intangible property of every
kind and nature.
"Goods" means all things which are movable at the time the
security interest attaches or which are fixtures (other than
money, Documents, Instruments, Investment Property, Accounts,
Chattel Paper, General Intangibles, or minerals or the like
(including oil and gas) before extraction), including standing
timber which is to be cut and removed under a conveyance or
contract for sale, the unborn young of animals, and growing
crops.
"Initial Term" has the meaning set forth in Section 7.1.
"Instrument" has the meaning set forth in the UCC.
"Inventory" means all Goods held for sale or lease or furnished
or to be furnished under contracts of service, including all raw
materials, work in process, finished goods, goods in transit and
materials and supplies which are or might be used or consumed in
a business or used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such Goods, and
all products of the foregoing, and shall include interests in
goods represented by Accounts, returned, reclaimed or repossessed
goods and rights as an unpaid vendor.
"Investment Property" shall mean all of Borrower's securities,
whether certificated or uncertificated, securities entitlements,
securities accounts, commodity contracts and commodity accounts.
"Lender" has the meaning set forth in the heading to the
Agreement.
"Lien" means any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property,
whether such interest is based on common law, statute or
contract, including rights of sellers under conditional sales
contracts or title retention agreements and reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances affecting property. For the purpose of this
Agreement, Borrower shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to
the property has been retained by or vested in some other Person
for security purposes.
"Loan Account" has the meaning set forth in Section 2.4.
"Loan Documents" means the Agreement and all notes, guaranties,
security agreements, certificates, landlord's agreements, Lock
Box and Blocked Account agreements and all other agreements,
documents and instruments now or hereafter executed or delivered
by Borrower or any Obligor in connection with, or to evidence the
transactions contemplated by, this Agreement.
"Loan Limits" means, collectively, the Availability limits and
all other limits on the amount of Loans and Credit Accommodations
set forth in this Agreement.
"Loans" means, collectively, the Revolving Loans and any Term
Loan.
"Lock Box" has the meaning set forth in Section 4.1.
"Maturity Date" has the meaning set forth in Section 7.1.
"Obligations" means all present and future Loans, advances,
debts, liabilities, obligations, guaranties, covenants, duties
and indebtedness at any time owing by Borrower to Lender, whether
evidenced by this Agreement or any other Loan Document, whether
arising from an extension of credit, opening of a Credit
Accommodation, guaranty, indemnification or otherwise (including
all fees, costs and other amounts which may be owing to issuers
of Credit Accommodations and all taxes, duties, freight,
insurance, costs and other expenses, costs or amounts payable in
connection with Credit Accommodations or the underlying goods),
whether direct or indirect (including those acquired by
assignment and any participation by Lender in Borrower's
indebtedness owing to others), whether absolute or contingent,
whether due or to become due, and whether arising before or after
the commencement of a proceeding under the Bankruptcy Code or any
similar statute, including all interest, charges, expenses, fees,
attorney's fees, expert witness fees, audit fees, letter of
credit fees, Closing Fees, Facility Fees, Servicing Fees, Unused
Line Fees, Minimum Borrowing Fees, Success Fees, amounts owing
under Warrants, Credit Accommodation Fees and any other sums
chargeable to Borrower under this Agreement or under any other
Loan Document.
"Obligor" means any guarantor, endorser, acceptor, surety or
other person liable on, or with respect to, the Obligations or
who is the owner of any property which is security for the
Obligations, other than Borrower.
"Permitted Liens" means: (i) purchase money security interests
in specific items of Equipment disclosed to Lender prior to the
date hereof or acquired by Borrower after the date hereof; (ii)
leases of specific items of Equipment disclosed to Lender prior
to the date hereof or acquired by Borrower after the date hereof;
(iii) Liens for taxes not yet due and payable; (iv) additional
Liens which are fully subordinate to the security interests of
Lender and are consented to in writing by Lender; (v) security
interests being terminated concurrently with the execution of
this Agreement; (vi) Liens of materialmen, mechanics,
warehousemen or carriers arising in the ordinary course of
business and securing obligations which are not delinquent; (vii)
Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type
described in clause (i) or (ii) above; provided, that any
extension, renewal or replacement Lien is limited to the property
encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not
increase; (viii) Liens in favor of customs and revenue
authorities which secure payment of customs duties in connection
with the importation of goods; and (ix) security deposits posted
in connection with real property leases or subleases. Lender will
have the right to require, as a condition to its consent under
clause (iv) above, that the holder of the additional Lien sign an
intercreditor agreement in form and substance satisfactory to
Lender, in its sole discretion, acknowledging that the Lien is
subordinate to the security interests of Lender, and agreeing not
to take any action to enforce its subordinate Lien so long as any
Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate Lien
shall also constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated
organization, association, corporation, government or any agency
or political division thereof, or any other entity.
"Prime Rate" means, at any given time, the prime rate as quoted
in The Wall Street Journal as the base rate on corporate loans
posted as of such time by at least 75% of the nation's 30 largest
banks (which rate is not necessarily the lowest rate offered by
such banks).
"Real Property" means the real property described in Section 10
of Schedule A.
"Released Parties" has the meaning set forth in Section 6.1.
"Renewal Term" has the meaning set forth in Section 7.1.
"Reserves" has the meaning set forth in Section 1.2.
"Revolving Loans" has the meaning set forth in Section 1.1(a).
"Sale" has the meaning set forth in Section 8.2.
"Subsidiary" means any corporation or other entity of which a
Person owns, directly or indirectly, through one or more
intermediaries, more than 50% of the capital stock or other
equity interest at the time of determination.
"Term" means the period commencing on the date of this Agreement
and ending on the Maturity Date.
"Term Loan" has the meaning set forth in Section 1.1(b).
"UCC" means, at any given time, the Uniform Commercial Code as
adopted and in effect at such time in the State of New York.
All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in
accordance with GAAP. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meanings
provided by the UCC, to the extent such terms are defined
therein. The term "including," whenever used in this Agreement,
shall mean "including but not limited to." The singular form of
any term shall include the plural form, and vice versa, when the
context so requires. References to Sections, subsections and
Schedules are to Sections and subsections of, and Schedules to,
this Agreement. All references to agreements and statutes shall
include all amendments thereto and successor statutes in the case
of statutes.
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule
B as of the date set forth in the heading to the Agreement.
Borrower:
RAYBESTOS PRODUCTS COMPANY
By
Its
Lender:
NationsCredit Commercial Corporation, through its NationsCredit
Commercial Funding Division
By
Its Authorized Signatory
Schedule C
Affiliates and Subsidiaries of Borrower
Raytech Corporation
Raytech Composites, Inc.
Raytech Powertrain, Inc.
Raytech Fasteners, Inc.
Allomatic Products Company
Raybestos Aftermarket Products Company
Raybestos U.K. Ltd.
Raytech Composites Europe GmbH
Raybestos Reibtechnick GmbH
Raybestos Industrie-Produkte GmbH
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule
C as of the date set forth in the heading to the Agreement.
Borrower:
Raybestos Products Company
By
Its
Lender:
NationsCredit Commercial Corporation, through its NationsCredit
Commercial Funding Division
By
Its Authorized Signatory
NationsCredit Commercial Funding Loan and Security
Agreement
5
NationsCredit Commercial Funding
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